An increase in taxes will cause a(n):
A)decrease in the quantity of real domestic output demanded.
B)increase in the quantity of real domestic output demanded.
C)decrease in aggregate demand.
D)increase in aggregate demand.

Question

Quizplus · Accepted Answer

An increase in taxes will decrease consumers' disposable income, which results in a decrease in consumption spending. This decrease in consumption spending will shift the aggregate demand curve to the left, causing a decrease in aggregate demand.

An Increase in Taxes Will Cause A(n)